‘The fact that the economy grew a fourth straight quarter on the back of exports should be considered a passing mark for policymakers’. – Hidenobu Tokuda, Mizuho Research Institute
Japan’s economy expanded for the fourth consecutive quarter in the three-month period to December 2016 amid higher exports supported by the weak Yen. Figures released on Monday showed Japan’s economy grew at an annualized pace of 1.0% in the Q4, following the preceding quarter’s downwardly revised pace of 0.3% and falling behind analysts’ expectations for a 0.3% expansion. Economic growth in the Q4 was mainly driven by stronger exports, which offset weak domestic demand. Last week, during a meeting with the Japanese PM Shinzo Abe, the US President Donald Trump accused Japan of using its monetary policy to weaken the Yen and benefit from it. The US Dollar rebounded sharply in the weak of the US 2016 presidential election, rising above 118 versus the Yen and rebounding from its October low of 101. Monday’s data showed external demand contributed 0.2% to GDP in the Q4, with exports climbing 2.6%, the strongest growth in two years, while private consumption showed no growth, meeting analysts’ projections. Meanwhile, housing investment advanced 0.2%, the slowest growth in four quarters, whereas capital expenditure jumped 0.9%, following a 0.3% drop in the previous quarter. The data also showed the GDP deflator, another measure of inflation, declined 0.1% in the past quarter, marking its second quarterly decline.
